KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
South Korea’s household debt grew at an accelerating pace in the last quarter, a development that may prevent the Bank of Korea (BOK) from considering a near-term policy pivot when it meets later this week.
Key Highlights:
Rising Household Debt: Total household credit increased to 1,896 trillion won (approximately RM6.23 trillion) in the April-June period, marking a 1.9% rise from the previous year, according to the BOK. Mortgage loans, which are the primary driver of household credit, surged by 5.9% year-on-year to 1,093 trillion won.
Impact on Monetary Policy: The increasing debt levels, particularly in the housing sector, are likely to strengthen the central bank's resolve to maintain the benchmark interest rate at 3.5%, a rate considered restrictive. The BOK is scheduled to meet on Thursday, and these developments suggest that a rate cut is unlikely in the near term.
Housing Market Concerns: BOK Governor Rhee Chang-yong has previously expressed worries about rising household debt, particularly as home prices in Seoul continue to climb. South Korea has one of the highest household debt-to-economy ratios globally, with a significant portion of wealth concentrated in real estate.
Rate Cut Expectations: While many economists had anticipated a potential rate cut in October, these expectations could be delayed if the housing market continues to show signs of overheating. Additionally, an export rally driven by artificial intelligence chips is bolstering policymakers' confidence that the economy can sustain current restrictive policy settings.
Regulatory Measures: In a bid to curb private lending, South Korea’s Financial Services Commission announced on Tuesday that it will reduce the mortgage loan limit for homes in the greater Seoul area starting from September 1.
Outlook: The rapid growth in household debt, coupled with rising home prices, presents a significant challenge for South Korea's central bank. The BOK is likely to maintain its current interest rate to prevent further financial imbalances, particularly in the housing sector. The situation will continue to be closely monitored, especially as economic conditions evolve and the central bank weighs its options for future monetary policy adjustments.
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